Eisner No Longer Disney Chair

Jaw-dropping 43% no-confidence vote at shareholders
meeting

Thursday, March 4, 2004
by Mark Goldhaber, staff writer

Philadelphia, Pennsylvania  In an unprecedented move, 43.4 percent
of voting shareholders voted to withhold their approval of Walt Disney
Company Chairman Michael D. Eisner yesterday afternoon, leading to a unanimous
decision by the Board to split the separate the positions of Chairman
and Chief Executive Officer. George Mitchell was immediately named new
Chairman, while Eisner retained his title as Chief Executive Officer.

Yesterday's history-setting events were set in motion by the Thanksgiving
weekend resignation of Roy E. DisneyWalt's nephewfrom the
board of the Walt Disney Company. Asked for his thoughts on the day's
events, Disney dryly noted, It was a very pleasant day for us.

And indeed it was.

Eisner received 1,007,715,682 votes in favor of re-electing him, while
771,691,297 voted to withhold approval. As the vote totals were announced,
Eisner appeared to be calculating the percentage in his head. Then, as
Chuck Oberleitner of Jim Hill Media remarked, There was a palpable
sense of diminished enthusiasm.

The size of the shareholder vote, unprecedented in American corporate
history, sends a clear signal to the Board of the Walt Disney Company
that change is necessary.

The size of the shareholder vote, unprecedented in American corporate
history, sends a clear signal to the Board of the Walt Disney Company
that change is necessary.

The Celebrate Mickey 75 InspEARations statues await shareholders before
the gates open at the Walt Disney Company annual shareholder meeting in
Philadelphia. Photo by Mark Goldhaber.

In addition to the votes against Eisner, 24.1 percent voted to withhold
their votes from Presiding Director George Mitchell, 22.5 percent voted
to withhold approval from Compensation Committee Chair Judith Estrin,
and 22.3 percent voted to withhold their approval from Nominating and
Governance Committee Chair John Bryson. These four, targeted by the Save
Disney effort because of what its founders Roy Disney and Stanley Gold
felt were poor leadership qualities, shows that their campaign to both
rouse the individual shareholders and lobby the institutional shareholders
was extremely successful.

The day started out on a cheerful note as Donald Duck and Cinderella
greeted over 3,000 shareholders, who lined up and filed into the convention
center past the 75 six-foot-tall statues of Mickey Mouse, recently moved
from the Walt Disney World Resort. The crowd was so large than many were
sent to an overflow room to watch the proceedings on closed-circuit television.

Matthew Borrie, a high school senior from Swedesboro, New Jerseywho
was missing school to attend the meetingwas first in line, having
arrived at 5:00 a.m. Borrie, a supporter of the Save Disney campaign,
was looking forward to the day's events. Upon exiting after the vote totals
were announced, he said, It's a good sign. Hopefully, the Board
gets it.

Left to right: Matthew Borrie, Herb Moskovitz, Carolyn Hausman, and Marilyn
Miller wait to enter the meeting, having arrived at 5 a.m. to claim the
first spots in line. Photo by Mark Goldhaber.

Not everybody made it inside, however. When Jim Hill and Chuck Oberleitner
of Jim Hill Media arrived at the press check-in table, Disney Corporate
Communications staff informed them that their press credentials had been
revoked because they were considered advocates for Save Disney instead
of media, based on the contents of an article in the Wall Street Journal
the previous day.

Hill said that he understood that they were probably just doing their
job, being told to keep him out by higher-ups. He said that they were
polite and professional, if a little cool, but would in no way let him
into the meeting as press.

Unfortunately, they took me from covering a story to being the
story, he said. While Hill was shut out completely, Oberleitner
was able to enter the meeting as a guest of a Disney shareholder.

In discussing the role that the Internet mediaspecifically the
Disney-centric Internet mediaplayed in this historic vote, Hill
said, My God, we actually played a part in something huge.

In discussing the role that the Internet mediaspecifically the
Disney-centric Internet mediaplayed in this historic vote, Hill
said, My God, we actually played a part in something huge.

Representatives of Jim Hill Media, LaughingPlace, as well as MousePlanet
were granted press credentials for the Save Disney events and/or the Disney
shareholder meeting. In fact, when questioned at a press conference following
the annual meeting about the Internet's role in the Save Disney campaign,
Stanley Gold said it was enormously effective. And once again,
the online media proved to be an informational source for the traditional
press, with representatives of the Internet media organizations being
interviewed by MSNBC, CNBC, Reuters, the BBC, Philadelphia Weekly,
and other broadcast and print media. In addition, many other Disney-centric
Web sites were in attendance, from Intercot to BadShoe.com.

Cinderella was on hand to greet arriving shareholders. Photo by Mark Goldhaber.

In his opening remarks, Eisner explained the poor performance of ABC,
the ABC Family Channel, and the Disney Stores by saying, No matter
how diligent we are in implementing our vision and our business strategy,
success is never guaranteed in a creative enterprise.

In the interest of maintaining decorum, before opening floor discussion
of the business section of the meeting, Gold and Disney were given 15
minutes for a presentation to the shareholders. Their remarks ran beyond
the allotted time, but they were allowed to finish uninterrupted.

Donald Duck gets a kiss on the beak from a young shareholder. Photo by
Mark Goldhaber.

Gold thanked the board and management for the opportunity to speak, and
said, It's the last thingand the most difficult thingwe
ever wanted to do.

Let me be clearno half measures, no excuses, no amount
of spinning will be tolerated. Shareholders have waited too long and
have spoken too clearly. Michael Eisner must leave now!

He then went on the attack. Predicting a 40 percent withhold vote against
Eisner, and 20 percent withhold vote on other three targeted directors,
Gold said, While we have watched the value of our equity decline,
Michael Eisner has never had a bad year. He warned the board: In
essence, you have compromised your soul and lost your integrity.
Gold then warned the Board, Let me be clearno half measures,
no excuses, no amount of spinning will be tolerated. Shareholders have
waited too long and have spoken too clearly. Michael Eisner must leave
now!

Roy Disney said, The Walt Disney Company is more than a business.
It is an authentic American icon, and further stated that I
believe our mission has always been to be bringers of joy, to be affirmers
of the good in each of us, to bein subtle waysteachers.

It was obvious to observers that the vast majority of those in attendance
were in favor of the Save Disney campaign. While applause for Eisner was
always tepid and came from a small group in the front center of the meeting
room, Disney and Gold were greeted with wild applause and standing ovations
of perhaps a third of those in attendance. Yet the microphones seemed
stacked with Eisner supporters, a method not uncommon at these types of
events when there is something controversial on the table.

And so a meeting better known for its previews of coming attractions
and shareholders asking for the lowering of theme park admission prices
and whether the story that they wrote could be turned into a movie, has
turned into one of the biggest international corporate governance stories
of the year.

Hours after the meeting, the company announced that the Board of Directors
had decided to split the roles of Chairman and CEO, and named George Mitchell
as Chairman of the Board and left Michael Eisner as CEO. The company said
that they felt that the withhold vote was mainly conveying concern regarding
the governance of the company, specifically regarding the necessary split
of the Chairman and CEO roles.

They added, That is not to say that we view the vote as limited
to governance issues alone. We are aware that some voted for an immediate
change in management and in the board. However, taking all of these factors
into account, we believe the action we have taken today is in the best
long-term interest of the shareholders of the company.

Roy Disney (left) and Stanley Gold are all smiles at a press conference
following the annual meeting. Photo by Mark Goldhaber.

Comcast used the results of the vote to request that the board re-inspect
the bid proposal, but the board said that it does not believe today's
reiteration by Comcast of its previous proposal, which we rejected as
inadequate, would lead to a transaction beneficial to Disney shareholders.
The Board will carefully review and analyze any reasonable proposal.

In the meantime, Stanley Gold and Roy Disney have vowed not to rest until
Michael Eisner is gone from the companybut their next move is anybody's
guess.

This is one story that is going to be around for a while, and we will
have to see what comes next.

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